India Still Lags in Innovation

Much has been made in the world’s press about India’s economy buoyed by its IT sector. And a lot of it is justified. The nation’s IT sector managed to grow some 20 percent in 2008, according to India’s National Association of Software and Services Companies, and IT firms have already extended 100,000 job offers for 2009.

But all is not rosy for India. While the country has surged in the basic and mid-level areas of coding and development, it has struggled in the area of R&D and top-end innovation. India produces about 300,000 computer science graduates a year. Yet it produces only about 100 computer science PhDs, a small fraction of the 1,500 – 2,000 that get awarded in the United States or China every year according to a recent article from Reuters.

“Students here are not exposed to research from an early age, faculties are not exposed to research and there’s no career path for innovation because there’s a lot of pressure to get a ‘real’ job,” said Vidya Natampally, head of strategy at the Microsoft India Research Centre. Rival China has already pulled ahead with more than 1,100 R&D centers compared to less than 800 in India, despite lingering concerns about rule of law and intellectual property rights (IPR). India is also losing out in the patent stakes. In 2006 – 2007, just 7,000 patents were granted in this country of 1.1 billion people, compared to nearly 160,000 in the United States.

India is cheaper than China for R&D. But salaries in India have been rising by about 15 percent every year and may soon reach parity with China. R&D centre costs in Shanghai are currently just 10-15 percent higher than in India.

But this could be changing: Microsoft, for example, has just opened a new facility in Bangalore staffed with about 60 full-time researchers, many of them Indians with PhDs from top universities in the United States. The center “is at the cutting edge of Microsoft’s R&D, covering seven areas of research including mobility and cryptography. Cisco, IBM, Intel, Nokia are among the other companies going beyond low-end coding to bring R&D to India.

Jacob Cherian is AlterNow’s India Contributor. He is a freelance business writer based in Kerala, India. He has written about business outsourcing for Offshore Advisor.